SARB predicts higher growth and lower inflation The South African Reserve Bank (SARB) outlined a “goldilocks” scenario of stronger growth and lower inflation at its MPC meeting this week. The actual decision to cut the benchmark repo rate by 25bp, to …
20th September 2024
Bank to step up the pace of easing The Summary of Deliberations from September’s policy meeting, published on Wednesday, revealed that the Bank of Canada is placing increasing emphasis on the downside risks to inflation and activity. Some on the Governing …
Fed opts for a 50 despite strong GDP growth Fed goes big The Fed’s decision to start its rate cutting cycle with a bang was not a big surprise after the seemingly coordinated media articles late last week warning that the 25bp vs 50bp debate was closer …
The contrast between the Bank of England keeping interest rates on hold at 5.00% this week, along with the accompanying message that it will cut interest rates only gradually, and the US Fed kick-starting its easing cycle with a big 50 basis point (bps) …
Note: We’ll be discussing key takeaways from our Europe Economic Outlook, including the scope of Germany’s downturn, in a Drop-In on Tuesday, 24th September . Register here for the 20-minute online briefing. The US Fed’s decision this week to cut interest …
The Fed’s decision to cut interest rates by 50 bp gave most commodity prices a boost this week. We suspect that lower interest rates won’t have a sizeable impact on US commodity demand this quarter and, next year, prices are more likely to be driven by …
Tailwind from Fed’s easing cycle will be small The US easing cycle that got underway with a 50bp cut this week will provide a boost to economic activity in Hong Kong, where a fixed exchange rate means interest rates track those in the US. We expect the …
Storm Boris floods Central Europe The flooding in Central Europe over the past week has been described as the worst in the region in the last two decades and our thoughts are with those affected. The most heavily impacted areas have been in Poland, …
RBI will focus on domestic factors rather than Fed Events this week have been dominated by the Fed’s 50bp rate cut to kick off its easing cycle. Clients can read our analysis of the decision here and watch our online briefing on demand here . Some EM …
Takaichi leading in the polls According to a recent poll, Economic Security minister Sanae Takaichi is seen as the most suitable successor for departing Prime Minister Fumio Kushida. However, the LDP’s leadership elections next Friday will probably …
Election risk to Sri Lanka’s recovery Sri Lanka has enjoyed a steady, if unspectacular recovery from the 2022 crisis which saw the country default on its debts and the president ejected from power in the face of huge popular protests. Data released late …
O labour market slack, where art thou? In the wake of the Fed’s hawkish 50bp cut and another set of strong Australian labour market data , the financial markets now see a lower 60% chance of an RBA rate cut by the end of the year, down from 85% when we …
PIF investment in Egypt: the first of many? Saudi Arabia’s Public Investment Fund (PIF) has pledged to invest $5bn into Egypt in a further sign that March’s policy shift is attracting international attention. At the same time, this will help to put …
19th September 2024
The Office for Budget Responsibility’s (OBR) “Fiscal risks and sustainability report”, published this week, showed that if left unchecked the public debt to GDP ratio would spiral from 98% now to 274% by the mid-2070s. Assuming a recession comes along …
13th September 2024
25bp vs 50bp debate finely poised The 25bp vs 50bp debate seemed settled following Governor Christopher Waller’s speech shortly after the August Employment Report, in which he suggested that he was leaning toward the smaller move. The cautious tone of …
The US dollar is ending the week on the back foot against most currencies amid mounting expectation for a 50bp cut by the Fed next week. That comes in the wake of two seemingly coordinated pieces in the FT and WSJ which suggested it will be a close call …
The sharp rebounds in both residential and non-residential building permit issuance in July eased concerns that the construction sector is about to take a turn for the worse. Risks remain, however, particularly for residential construction in Toronto. …
Mexico: judicial reform clears final major obstacle Outgoing Mexican President Amlo’s controversial judicial reform passed the final major hurdle this week with approval in the senate. This has contributed to a sharp fall in the peso – the currency is …
A temporary boost to employment growth After years of delay, China’s legislature today passed a bill that raises the statutory retirement age for the first time since 1978. In January, it will increase from 60 to 63 for men, 55 to 58 for white-collar …
“Gold’s poor cousin” to lag behind For all the attention on gold this year, silver has been the better performer with prices increasing by over 25% year-to-date. Some of the tailwinds that have boosted the gold price, like lower Treasury yields and a …
The ECB’s easing cycle continued this week and the first Fed rate cut is just around the corner, but we still think that central banks in Central and Eastern Europe (CEE) are now at the beginning of a slower phase of their easing cycles and will loosen …
The main event of this week was the ECB’s meeting on Thursday, where the Bank cut its deposit rate by 25bp, to 3.5%, as widely expected. Christine Lagarde made clear in the press conference that further rate cuts are on the cards, but she gave little away …
SARB set to join the EM rate-cutting party The current make-up of the MPC means that it will be a close call, but we expect the South African Reserve Bank to embark on an easing cycle next week. How quickly rates come down, though, partly depends on …
What will the US election mean for the Asia growth outlook? Will China’s economy overtake the US? Will India fulfil its growth potential? We’re tackling these issues and more in our Asia roundtable in London on Tuesday, 24th September. If you’d like to …
More signs of a thawing in relations with China We recently took a deep-dive into the evolution in Sino-Indian relations (see here ), arguing that India’s attempt to establish more conciliatory relations with China speaks to an important way in which …
The public sector isn’t the main game In a speech this week, RBA Assistant Governor Sarah Hunter reiterated the Bank’s view that conditions in the labour market are currently not conducive to “wages growing at a rate consistent with achieving the …
Stronger yen reducing upside risks to inflation Developments over the past week seem to support the consensus view that the Bank of Japan will wait at least until December before hiking interest rates again. After all, the yen reached a fresh high against …
OPEC+ roll over doesn’t stop the oil price slide After we published our last Weekly , OPEC+ released a statement confirming that the group would roll over current oil production cuts until 1 st December. It also included previous phrasing that it has the …
12th September 2024
A week of decidedly mixed economic data has seen the tone shift towards risk-off across financial markets, with safe haven currencies on the front foot and the US dollar staging a bit of a recovery in the wake of today’s weak, but not disastrous, US …
6th September 2024
Unemployment rate drops back The 142,000 rise in non-farm payrolls and fall in the unemployment rate to 4.2% confirmed that some of the weakness in July was due to temporary factors, with the number of people on temporary layoff falling by 190,000. That …
The communications from the Bank of Canada this week suggest that the rise in the unemployment rate in August is unlikely to be enough to trigger larger interest rate cuts, which is probably a sign that the Bank is comfortable with the extent of loosening …
The strength of Brazil’s economy in Q2 means the central bank (BCB) now looks set to raise interest rates, having cut rates as recently as May. Still, monetary tightening is likely to be modest, of around 150bp (to 12.00%), and will end early next year. …
The lingering concerns over whether the US manufacturing sector and overall economy are heading for recession begs the question of whether the UK’s manufacturing sector and overall economy will go the same way. The fear is that the recent period in which …
Two months after the conclusion of France’s parliamentary elections, we finally know the name of the next prime minister (the fifth since 2020). The good news, at least for France’s creditors is that Michel Barnier, who is a member of the centre-right Les …
Will OPEC+ ever increase output? The big news this week was the decision by some OPEC+ members to extend their voluntary output cuts until December. For context, these producers had originally announced they would begin raising output from next month. …
What will the US election mean for Asia's growth outlook? Will China's strength in emerging technology help it overtake the US? Is India doing what is needed to fulfil its growth potential? We’re tackling these issues and more in an Asia roundtable in …
Indonesia budget eases fiscal concerns Indonesia’s budget for 2025 moved a step closer to being passed this week after a parliamentary committee and the government reached agreement on the main fiscal targets for next year. (The budget will now be put …
SA GDP rebounds in Q2, surveys muddy the water Data released this week showed that South Africa’s economy picked up in Q2 and, while August’s manufacturing PMI painted a downbeat picture, other key surveys released this week were more positive. On …
Turkish officials expecting a goldilocks rebalancing The medium-term economic programme presented by Turkey’s government this week highlights that policymakers remain committed to orthodox policies to deal with the country’s large macroeconomic …
Growth slowing, but economy still in good shape After all stellar run over recent quarters, data released late last week showed that GDP growth slowed in Q2 (Q1 of FY24/25) to 6.7% y/y, from 7.8% y/y in Q1. (See our initial response to the data here .) …
RBA will need to see more progress on inflation National accounts data released this Wednesday made for grim reading. They confirmed that Australia’s run of sluggish activity continued in Q2, with real GDP rising by a tepid 0.2% q/q for a third …
Regular pay growth hits 32-year high According to preliminary figures for July , regular wage growth jumped from 2.2% y/y to 2.7%, which is where we had expected it to peak in the second half of this year. And an alternative gauge that the Bank of Japan …
Is OPEC+ backing itself into a corner again? The price of oil has slumped even further this week and is now not far off its lowest level in three years. With a potential end to the Libya crisis in sight and our expectation of global oil demand to stay …
5th September 2024
The dollar has rebounded a little this week ahead of next week’s crucial US non-farm payrolls report. The incoming data this week has generally supported our view that the US is on track for a soft landing, and if we are right in thinking that payrolls …
30th August 2024
Harris supports dramatic increase in taxes After unveiling plans to boost spending and cut taxes for the middle-class in a big speech a couple of weeks ago, Vice President Kamala Harris has quietly acknowledged since then that she intends to pay for those …
Second-quarter GDP growth surprised to the upside of the Bank of Canada’s forecast, but the evidence that growth slowed sharply over the quarter suggests that third-quarter growth will be much weaker than the Bank is anticipating. That raises the chance …
Canada joins tariff hiking club On Monday, Canada announced a 100% tariff on imports of Chinese electric vehicles and 25% tariffs on aluminium and steel. The tariffs themselves won’t have much of a macro impact – the affected goods make up less than 0.1% …
The Prime Minister’s statement this week that “there is a budget coming in October, and it’s going to be painful…those with the broader shoulders should bear the heavier burden” has prompted yet more speculation about how much tax revenues will rise and …
Canada’s tariffs on China’s electric vehicles Canada recently took a leaf out of the US trade policy playbook (see here ) by announcing a 100% tariff on Chinese-made electric vehicles (EVs). We think that the macroeconomic impact of the tariffs on China …
Chinese lending to Africa increases Data out this week showed that Chinese lending to Africa increased for the first time since 2016. With fiscal policy tight, African economies will welcome more financing. But the region would also benefit from efforts …
